Emergency Fund

designbythink 2018, Quarter 2 Newsletter 2018

Do you have an emergency fund?

Life can be unpredictable and It always helps to be prepared for a rainy day.
Trustee Craig Watters offers some advice on starting your own emergency fund.

Your personal finances consist of a number of components.

Your salary is deposited into your bank account and you may also have one or more of the following:

  • a savings account
  • a loan
  • a mortgage
  • a stokvel
  • other financial products.

These things, as well as others, all help you on your financial journey.

However, a crucial part that most of us seem to ignore, is having an emergency fund.

What is an emergency fund?

You create this fund to help you during an emergency or some form of unplanned expense.

Think for a moment what you would do if you had to replace your geyser at home. Or if your car had to go in for repairs. Or any unplanned expense that needs your urgent attention. Where are you going to get the money to pay for this?

Unfortunately most people have to go into debt and borrow money to pay for unexpected expenses. Or they agree to pay lenders ridiculously high interest rates for a small loan.

This often puts us in a worse situation because we tend to fall into a debt trap and battle to escape it. Sometimes our luck just isn’t in our favour and not one but many unplanned expenses come our way in quick succession.

This can quickly put us in dire straits and our finances may take a long time to recover. This can be very stressful.



Your emergency fund has the potential to help you through difficult financial times.

When you really need it, you can draw from this account instead of getting further into debt. But remember, this is for emergencies only.

You should not be using this money for a new pair of shoes or a cellphone.

Your emergency fund should have enough money in it to cover at least three months’ living expenses.

It is your own responsibility to set up this account.